Buying out husbands share of house

[Catherine90]

Hi,

 

I am looking for some advice on buying my husbands share of the house as part of our financial settlement. Our divorce is somewhat amicable and it has been a relatively short marriage (5 years) and we are both in our mid 20s.

 

Our house was purchased for £85,000 around 4 years ago and we have spent around £2000 making improvements, however in that time other things in the house have deteriorated I.e. The bathroom and kitchen with built in appliances now need replacing which would cost another additional £3-5000 (I don't know if this is relevant so thought I'd mention it).

 

We have £55,000 left to pay on the mortgage, so going from the purchase price we have £30,000 equity.

 

Now my main question is:

 

Do we HAVE to get a formal valuation, or could we agree on a price ourselves? My husband has said he's happy for me to buy out his house share at the price we paid for it, which I think may be slightly lower that its current market value as I'd expect it to have gained a little in 4 years. I would love to be able to buy him out for the lowest amount possible (obviously) and if we had to get a formal valuation it would be valued above the purchase price (I'd say around £90,000).

 

My husband has also stated that he'd be happy for me to have my share of the house deposit back (we paid a £25,000 deposit of which I paid £18,000 and he paid £7000). This would then mean I would only need to borrow an additional £9500 to buy him out, as out of the £30000 grand equity the first £18,000 would come to me, the next £7000 go to him, and then a 50:50 split of any other remaining equity. The reason for his agreeing this is that he doesn't see it fair that I lose the savings I'd saved from childhood which were what paid for my share of the deposit.

 

I feel my husband is being very generous with this (even though I initiated the divorce) and whilst I don't want to be unfair to him, I obviously want the best financial outcome for myself and would like to take out what I brought in to the marriage. I am paying for legal representation for the divorce and financial settlement, however my husband isn't, and we are happy to negotiate on the financial settlement ourselves rather than completing the From E as we both know each others full financial situations. My solicitor has advised that as long as we can agree on everything, all he will need to do is draw up the consent order, however he is away for the next 3 weeks and we will be drawing up the consent order when he's back, and I have been told to start negotiations with my husband in the meantime which we've been doing. My husband is also refusing to obtain legal representation when signing the consent order as he wants to keep his costs down.

 

We have agreed that we aren't going to go for a share of each other's savings and bank accounts and will instead keep what we each have (they're about the same anyway but after I pay for the legal costs of divorce he'll have a little more than me) and he is also having our car which is valued at approx £2500.

 

If my husband signs the consent order stating the above (without legal representation), are there any foreseeable reasons why it wouldn't be upheld? And any other advice or guidance would be appreciated.

 

Thanks

 

Cath

[Angelica21]

Wow, Cath, that's a lot of information! LOL! But I did read all of it!

 

The most important thing you wrote is "My solicitor has advised that as long as we can agree on everything, all he will need to do is draw up the consent order." Your solicitor knows the law. Therefore you can be confident that if you and your spouse make an agreement, and the solicitor draws it up and files it, then it is legal.

 

My short answer: yes, you can buy out your husband's share of the house without a formal valuation. The amounts you've mentioned seem like a good and fair plan financially. I think you could move forward with that and feel comfortable and confident without a formal valuation. You and your husband already agreed on the amount to buy him out, so there is no need to get a formal valuation. From what your solicitor indicated, there is no law that says a divorcing couple must get exactly 50% of the formal evaluation value of the house. It is flexible, plus you and your husband appear to be planning an agreement that would be extremely close to that formal valuation amount today anyway. (i.e. 50% of the value when you purchased four years ago is probably very similar to 50% of today's value, housing prices have not been inflating very much in that period of time)

 

Another short answer: yes, you can have your solicitor write up the above agreement into the consent order. After the consent order is signed by you and your spouse, everything will be fine and legal, even though your husband does not have his own legal representation. There is no requirement for both spouses to have their own legal representation.

 

Well, that part of my answer was easy! I do have several other points to mention that either support what you've already planned to do, or just give you something to think about.

 

As an analogy, what you're describing in your country is very common in divorces here in the United States.

 

There is an informal phrase for the part of the negotiations that take place just between the divorcing couple: "kitchen table negotiations." That is, you negotiate between each other and come up with as much as possible that you can agree on. When a divorcing couple is amicable, and both are seeking a fair and equitable settlement, and both believe they are getting a fair and equitable settlement, it works very well.

 

After that, usually both spouses each have their own attorney (solicitor) review the agreement, write it up in legal language, and file it with the court system. But sometimes one spouse has an attorney and the other doesn't.

 

In the United States, some states have a strict 50/50 law where there are no questions asked, everything gets split 50/50.

 

But there are other states where the law is stated as "a fair and equitable agreement", which sounds like your situation in your country.

 

In a state such as Illinois, a "fair and equitable agreement" state, the divorcing couple and their attorneys generally start by aiming for a 50/50 agreement anyway. But there is more flexibility re: determining the value of the home, or determining how to divide assets, etc. As long as both spouses reach an agreement without coercion, then the the Marital Settlement Agreement (MSA) gets filed in court and becomes official.

 

Another thing that can happen in the United States, but is not very common, is that a spouse can petition the court to re-open the MSA and change it after it's been filed, sometimes years later. This is relatively rare, and a judge will not tolerate trivial reasons such as "I agreed to accept $9,000 for my share of the house, but now I think I should've gotten $12,000, so I want that $3,000 I should've gotten".

 

Your country may have a law allowing re-opening an agreement, but it seems highly unlikely that you or your spouse would do that, just like it is rare in the U.S. (Note: it is however much more common to re-open the Joint Parenting Agreement JPA to change details re: the children)

 

In the United States, a formal valuation of the house is called an "appraisal", but a divorcing couple doesn't usually need that. In the U.S. a real estate agent can usually tell you a very close approximation of the value of your house at no charge.

 

When I divorced, my husband and I each had our own attorneys, but he and I did almost 100% of our decisions as "kitchen table negotiations", and then our attorneys just made sure that everything in our agreement was legal, then they filed the papers with the court.

 

Divorce laws are set up to try to serve the needs of a wide range of situations, including situations where there are extreme details such as a large quantity of acrimony, hostility or greed, where maybe one spouse has a mental illness or drug/alcohol addiction that makes it impossible to negotiate informally, where there is a large quantity of disagreement about the children, or situations where there is not much money so every penny counts, or situations where there is a huge amount of money and the "stakes are high".

 

Most of us fall in the middle ground where we can do some of our negotiations and agreement by ourselves, some of it with some advice or assistance from attorneys or mediators, and then the paperwork is legally filed without a court trial. The only role of the judge is a brief meeting with the divorcing couple to ascertain that neither party was coerced, and then the judge signs the paperwork.

 

In the U.S. only about 10% of divorce cases must go to court trial to be decided by a judge. About 90% are decided out of court via an agreement put together by the divorcing couple and their attorney(s).

 

Also, you mentioned "Form E" which appears to be the equivalent of the "Financial Disclosure Statement" in the United States. To my knowledge, in the U.S a Financial Disclosure Statement is required to be filed for every case, even if there are no arguments or disagreements about what it reveals and how those assets will be divided. Is your Form E optional, and only needed in some cases?

Edited June 26, 2016 by Angelica21

[Beach Guy]

Now my main question is:

 

Do we HAVE to get a formal valuation, or could we agree on a price ourselves? My husband has said he's happy for me to buy out his house share at the price we paid for it, which I think may be slightly lower that its current market value as I'd expect it to have gained a little in 4 years. I would love to be able to buy him out for the lowest amount possible (obviously) and if we had to get a formal valuation it would be valued above the purchase price (I'd say around £90,000).

Consult with a trusted realtor in your area. Beyond the appliance issues you noted, there could be some hidden issues which could bite you as the sole owner trying to sell in the future. (structural/foundation, mechanical, unpermitted construction, code violations; and/or what if your local municipality is exploring plans to re-route a highway nearby/next to your home, etc.)

[mikeylo]

Even if it seems easy divorce settlement at the moment, get attorneys views. Pay up the fees now to save future unpredictable results. People change their mind and money is huge driving force.

[LifesontheUp]

I would think long and hard whether you want to stay in the home you shared long term.

 

I bought my ex husband out and within a couple of years when I met my current husband I did regret it - what seemed like a good idea at the time wasn't such a good one later on.

 

When it came to agreeing on who had what, we decided between us what we would keep - it goes down to the sofa's, kitchen appliances etc which all have a value even at second hand. With regards to the house valuation, I went and paid an estate agent for a proper valuation - not the ones that they do for you when they put it on the market, but the ones done by a surveyor as they are more realistic.

 

You could always look on rightmove at the sold house prices in your street too for a guide to what they are selling for.

 

It is cheaper not to have legal representation, but when you have it you can still agree on what you want to split without the solicitor doing that for you.

 

Word of caution - make sure that you have the clause in there that he cannot claim any of your pension at a later date.

[carhill]

OP, given what you've shared, your solution sounds fair and equitable to the parties and, as long as the documents are filed in the proper manner with content meeting the court's guidelines, your dissolution will be granted. Courts, in general, don't care, unless they're compelled to care, about the minutiae of couple's settlements. Ergo, unless one or both of you were to bring action in the future, what you file in a couple weeks will be long lost into the archives and forgotten forever and life will go on.

 

I did some of this but with 3 houses and two businesses and six years later it's, yup, long forgotten and exW and I are both living healthy and productive lives. We divorced amicably and have lived that way since. I doubt that'll change. Your situation sounds pretty similar. Of course, you apparently live in the UK and the laws are different but you have a solicitor for that part so are good to go. Get it done and move on.

 

Around here it's much easier to sell a house that's not actively involved in a divorce action but that may be different in the UK. Hence, if similar, and you can afford to buy out his interest, that would be my preferred option and then decide, once settled, whether staying, apparently your current preference, or selling is next steps. With the equity in the house, if choosing to sell, it's easy enough to perform any necessary repairs while in the sale process. If necessary now, you can always roll the cost of the repairs into the financing to buy out H's equity and have the contractors paid directly by the lender. Crunch the numbers and see how it looks. Good luck!

[0503]

Thank you all for your replies

[0503]

Sorry I clicked post before finishing typing my message.

 

Thank you for the information you've all provided (even though it isn't even my post lol).

 

My husband and I are on the verge of separating, and this situation with the house deposit etc is very similar to us so it's good to get some viewpoints of other people so I'm better prepared should it come it this. It's something we're discussing at present due to our situation so the words of advice are very helpful.

 

Catherine90 sorry I can't give any advice but wishing you the best of luck with everything

[PegNosePete]

Do we HAVE to get a formal valuation, or could we agree on a price ourselves?

You don't have to get a valuation at all. You can agree on whatever you like.

 

You have to get it approved by the court, but the breadth of their agreement is wide. You could not take 100% of assets and leave him destitute, but as long as you're both getting a reasonable outcome, the court will accept whatever you can agree between you.

 

You give a lot of figures even going back to your childhood, which to be frank I didn't read, because they aren't really relevant. When you marry someone you agree to share all your worldly goods. If your husband is happy with your calculations, and your solicitor agrees that it's a good deal for you, and the court will approve it... then fine, all good.

 

I am paying for legal representation for the divorce and financial settlement

Then to be blunt I'm not sure why you're asking for advice from an internet forum You're paying someone to give you advice, you should ask your solicitor.

 

You may be happy to forego the full form E but you will have to complete a reduced version.

 

My husband is also refusing to obtain legal representation when signing the consent order as he wants to keep his costs down.

That is pretty stupid, but it's his decision and his business.

 

If my husband signs the consent order stating the above (without legal representation), are there any foreseeable reasons why it wouldn't be upheld?

It is *possible* although extremely difficult and expensive, to challenge a consent order on the grounds that he didn't receive proper legal advice at the time. However you have advised him to get legal advice, and so would all the documentation that he will have read, so that's why it's almost impossible to succeed. It might be worth getting him to sign something saying that he knows what he is doing and agrees to abide by the consent order despite not having legal advice. But again, this question is really one that you should be asking your solicitor when he is back. Stick to negotiating the figures with your husband. Leave the legals to the experts.

 

Oh and don't actually hand any money or assets over until it's all signed and sealed